New to FSA and Planning a baby

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
abhilash1234
Posts: 1
Joined: Tue Feb 20, 2018 4:19 pm

New to FSA and Planning a baby

Post by abhilash1234 » Tue Feb 20, 2018 4:28 pm

Hello Folks,

I've been with my company for 3 years now and never had a thought of having a FSA account.

We are now planning a baby which would be within this year (hopefully). I've missed the FSA enrollment deadline for this year which was 12/31/17.

I see that a child birth is an qualifying event for FSA enrollment.. is that true?
If yes would I be able to claim the baby birth expenses (OB-GYN package fee + Hospital expenses etc.) as FSA eligible expenses.

I understood that the enrollment should be done within 30 days of birth.

Is there a amount limitation to the contribution I can make if the enrollment is mid year. I am assuming the $$ I contribute would be deducted from the remaining paychecks for the year.
Would I have to wait for end of the year to claim the birth expenses ? or those can be claimed in advance ?

Apologies for so many questions but I am new to this FSA thing.

rkhusky
Posts: 5710
Joined: Thu Aug 18, 2011 8:09 pm

Re: New to FSA and Planning a baby

Post by rkhusky » Tue Feb 20, 2018 5:04 pm

The maximum you can set aside in an FSA is $2600. You should check first how much your insurance covers. Many insurance plans cover 100% of maternity and birth costs. You lose the FSA amounts you don't use, although some plans let you roll over $500 to the next year or pay for expenses up to the first 3 or 4 months into the next year. Check your plan for restrictions.

You should be able to do full amount in the remaining months. You get reimbursed after you incur the medical expense. Some plans coordinate with your insurance and automatically send you the amount that the insurance did not cover and for which you need to pay out of pocket. Otherwise, you will need to collect itemized statements and submit to the FSA provider.

mega317
Posts: 2555
Joined: Tue Apr 19, 2016 10:55 am

Re: New to FSA and Planning a baby

Post by mega317 » Tue Feb 20, 2018 5:14 pm

$2650 this year. My plan allows $500 to roll over (and that doesn't have to be used in the first 3-4 months, in fact it's locked and I can't even get to it until May usually).

My children cost $250 and $0 respectively for the births, so yeah check that out. You can file a claim any time but you can only be reimbursed with money you have contributed.

feehater
Posts: 105
Joined: Fri Jul 14, 2017 10:14 am

Re: New to FSA and Planning a baby

Post by feehater » Tue Feb 20, 2018 5:45 pm

mega317 wrote:
Tue Feb 20, 2018 5:14 pm
. You can file a claim any time but you can only be reimbursed with money you have contributed.
I'm not sure this is true for every plan? I think have access to my full amount on 1/1 even though the deduction is spread over the next 52 weeks of pay. I have definitely used up my entire amount by halfway through the year. In effect, I guess I'm getting a small, interest free loan.

Darth Xanadu
Posts: 480
Joined: Sat Jan 27, 2018 1:47 am
Location: Middle Earth

Re: New to FSA and Planning a baby

Post by Darth Xanadu » Tue Feb 20, 2018 5:48 pm

feehater wrote:
Tue Feb 20, 2018 5:45 pm
mega317 wrote:
Tue Feb 20, 2018 5:14 pm
. You can file a claim any time but you can only be reimbursed with money you have contributed.
I'm not sure this is true for every plan? I think have access to my full amount on 1/1 even though the deduction is spread over the next 52 weeks of pay. I have definitely used up my entire amount by halfway through the year. In effect, I guess I'm getting a small, interest free loan.
That's interesting, I wonder if you quit, would you be forced to fund the rest of the balance?
"A courageous teacher, failure is."

feehater
Posts: 105
Joined: Fri Jul 14, 2017 10:14 am

Re: New to FSA and Planning a baby

Post by feehater » Tue Feb 20, 2018 6:11 pm

Darth Xanadu wrote:
Tue Feb 20, 2018 5:48 pm
feehater wrote:
Tue Feb 20, 2018 5:45 pm
mega317 wrote:
Tue Feb 20, 2018 5:14 pm
. You can file a claim any time but you can only be reimbursed with money you have contributed.
I'm not sure this is true for every plan? I think have access to my full amount on 1/1 even though the deduction is spread over the next 52 weeks of pay. I have definitely used up my entire amount by halfway through the year. In effect, I guess I'm getting a small, interest free loan.
That's interesting, I wonder if you quit, would you be forced to fund the rest of the balance?

Well I guess now I'll have to revise my exit plan to find out!

mega317
Posts: 2555
Joined: Tue Apr 19, 2016 10:55 am

Re: New to FSA and Planning a baby

Post by mega317 » Tue Feb 20, 2018 6:19 pm

feehater wrote:
Tue Feb 20, 2018 5:45 pm
mega317 wrote:
Tue Feb 20, 2018 5:14 pm
. You can file a claim any time but you can only be reimbursed with money you have contributed.
I'm not sure this is true for every plan? I think have access to my full amount on 1/1 even though the deduction is spread over the next 52 weeks of pay. I have definitely used up my entire amount by halfway through the year. In effect, I guess I'm getting a small, interest free loan.
I am corrected, I also have access to the full amount on Jan 1. My plan documents say that expenses incurred after the last day of the last month of employment are not reimbursable, but it says nothing about the money you haven't yet contributed.

BeneIRA
Posts: 496
Joined: Sat Nov 29, 2014 8:43 pm

Re: New to FSA and Planning a baby

Post by BeneIRA » Tue Feb 20, 2018 6:50 pm

mega317 wrote:
Tue Feb 20, 2018 6:19 pm
feehater wrote:
Tue Feb 20, 2018 5:45 pm
mega317 wrote:
Tue Feb 20, 2018 5:14 pm
. You can file a claim any time but you can only be reimbursed with money you have contributed.
I'm not sure this is true for every plan? I think have access to my full amount on 1/1 even though the deduction is spread over the next 52 weeks of pay. I have definitely used up my entire amount by halfway through the year. In effect, I guess I'm getting a small, interest free loan.
I am corrected, I also have access to the full amount on Jan 1. My plan documents say that expenses incurred after the last day of the last month of employment are not reimbursable, but it says nothing about the money you haven't yet contributed.
I'm in the industry. It is an IRS regulation that if an employee terminates before the end of the plan year, they do not have to give back the money they spent over what they contributed in their FSA.

For instance:
During Annual Enrollment, I elect the maximum, $2,650 for my FSA election.
On January 3rd, I incur an expenses of $2,650 and use my FSA card to pay for it.
On January 20th, I terminate employment.
I will probably only have two FSA deductions come out totaling $220.83. I "made" roughly $2,430.

All FSAs allow employees to have access to the entire goal amount on day 1. It is the biggest difference between an FSA and an HSA, well, aside from HSA dollars belonging to the employee and FSA dollars technically belonging to the employer. With an HSA, it is a bank account, so if the money is not in the account, In cannot spend it.

For an IRS explanation of being able to use all of the funds immediately: https://www.irs.gov/pub/irs-pdf/p969.pdf and here is the New York Times on why you will not have to pay back the excess you claimed: https://web.archive.org/web/20090325234 ... -job-loss/

jcchen
Posts: 75
Joined: Mon Oct 27, 2014 11:08 pm

Re: New to FSA and Planning a baby

Post by jcchen » Tue Feb 20, 2018 9:27 pm

yes, birth is a qualifying event so can elect to enroll in a FSA.

but in my experience, you can only withdraw from FSA for costs that were incurred AFTER the birth. any costs BEFORE birth are not allowed, because you didnt not have a FSA before birth.

ICMoney
Posts: 170
Joined: Fri Oct 28, 2016 2:38 pm

Re: New to FSA and Planning a baby

Post by ICMoney » Wed Feb 21, 2018 1:58 pm

Your OB may global bill (meaning all charges will be billed in one lump on the baby's birthdate) and the hospital bill will be dated as of the date of baby's birth. Unless your employer's plan does something like not making changes until the first of the next month, you should be able to elect FSA due to your qualifying life event and reimburse expenses dated as of the baby's birthdate through year-end. (like others have said, make sure your insurance will work the way you expect it to) It could be worth a call to HR to confirm it would work as you're expecting as well.

For what it's worth, we did exactly what you're describing in 2017. (had a baby late in the year, elected FSA within 30 day qualifying life event window to pay for medical expenses)

Best,
ICM

Darth Xanadu
Posts: 480
Joined: Sat Jan 27, 2018 1:47 am
Location: Middle Earth

Re: New to FSA and Planning a baby

Post by Darth Xanadu » Wed Feb 21, 2018 2:02 pm

BeneIRA wrote:
Tue Feb 20, 2018 6:50 pm

I'm in the industry. It is an IRS regulation that if an employee terminates before the end of the plan year, they do not have to give back the money they spent over what they contributed in their FSA.
Does this apply to Dependent Care FSAs as well?
"A courageous teacher, failure is."

atomicrc11
Posts: 170
Joined: Sat Nov 08, 2008 8:51 pm

Re: New to FSA and Planning a baby

Post by atomicrc11 » Wed Feb 21, 2018 2:21 pm

Darth Xanadu wrote:
Wed Feb 21, 2018 2:02 pm
Does this apply to Dependent Care FSAs as well?
No, it does not. Dependent Care FSA's only reimburse what you have contributed. I usually max out the Dependent Care FSA by March but each paycheck the amount that was withheld is directly deposited into my account.

BeneIRA
Posts: 496
Joined: Sat Nov 29, 2014 8:43 pm

Re: New to FSA and Planning a baby

Post by BeneIRA » Wed Feb 21, 2018 7:02 pm

Darth Xanadu wrote:
Wed Feb 21, 2018 2:02 pm
BeneIRA wrote:
Tue Feb 20, 2018 6:50 pm

I'm in the industry. It is an IRS regulation that if an employee terminates before the end of the plan year, they do not have to give back the money they spent over what they contributed in their FSA.
Does this apply to Dependent Care FSAs as well?
Atomic is correct. DCFSA is like a bank account in that the money can only be used once it is in the "account."

Post Reply